Videocon arm with Rs 75-cr turnover got Rs 650-cr loan

ICICI Bank granted loans worth Rs 650 crore to one of the five companies in the Videocon group — Evans Fraser & Company India Ltd, which had net sales of just Rs 75 crore in 2011 and a net profit of Rs 94 lakh, according to data from the Registrar of Companies (RoC).

Evans Fraser & Company alone in the Videocon Group received a loan close to nine times its total sale. The RoC document showed that Evans Fraser & Company runs a realty business alongside a share trading business (shares and securities). Venugopal Dhoot had earlier denied any rule violation in his dealing with Deepak Kochhar or ICICI Bank. But the profile of the company ICICI Bank lent to raises a larger question, did the bank provide a loan that was nine times higher than a company's turnover, risking its prospects of getting the money back? At a larger level, this also throws light into the way banks lend to their corporate clients. ICICI later declared loans to Videocon Group as a nonperforming assets (NPAs).

ICICI Bank provided loans not just to Videocon itself but to various group of companies, namely Trend Electronics Ltd, Century Appliances Ltd, Kail Ltd, Value Industries Ltd, Evans Fraser & Company India Ltd.

Most of these loans have been termed as NPAs, according to whistle-blower Arvind Gupta’s letter. Going by this, the sanctioning date of all these five loans is 30 April, 2012 and the loan amount to each of these firms is Rs 650 crore, taking the total to Rs 3,250 crore.